RECENT DIB AGREEMENTS
Earlier this month, the Department of Defense announced two “framework agreements” with defense primes Northrop Grumman and Lockheed Martin to triple Patriot Advanced Capability – 3 (PAC-3) and quadruple Terminal High Altitude Area Defense (THAAD) production. In July, “two landmark seven-year framework agreements” were reached with L3 Harris and Lockheed Martin for PAC-3 and THAAD components. These agreements anticipate future appropriations. Also in July, the Office of Strategic Capital announced a “conditional loan commitment of up to $820 million” for domestic manufacturing of critical drone components. These examples illustrate the new and urgent approaches to increase demand signals for existing and new technologies with the expanding Defense Industrial Base (DIB).
While the DIB has been, and still is, a powerful and strategic asset for national security, the path from real requirements to useful products with some semblance of cost-effectiveness and timeliness has been challenging.
Organizations, such as the now defunct Army Futures Command, tried to provide more user input into more refined requirements. The annual National Defense Authorization Acts provide annual acquisition reforms. Military services use organizational constructs such as Army Transformation Initiative, the Navy’s Golden Fleet, and the Air Force’s modernization and reform efforts to prepare for future conflicts with cutting-edge technologies, all within their assigned budget topline. In the past decade, a renewed focus on the DIB, through executive and legislative branch actions, has resulted in more investment, collaboration and innovation.
STRATEGY AND BUDGET GROWTH
One of the 2026 National Defense Strategy lines of efforts is to “supercharge the defense industrial base.” Overall DOD funding increases should help make that happen. The One Big Beautiful Bill Act (OBBBA) $152.6 billion in addition to FY26 $1 billion enacted discretionary budget were an increase over FY25. The FY27 DOD request is $1.5 trillion – $1.1 trillion in discretionary, or the traditional appropriations process, and $350 billion in mandatory funds. The first and largest section in the $350 billion FY27 mandatory request documentation is the DIB, with $113.1 billion spread throughout the department. Critical minerals ($48.7 billion identified) and domestic supply chains are the focus. Some of the requested funding is in addition to requests in the $1.1 billion of discretionary funding. The Office of Strategic Capitol Loan Program requested $216 million in discretionary and $20 billion in mandatory funding.
EARLIER DIB, SUPPLY CHAIN ACTIONS CREATED MOMENTUM
To understand the current request, a review of actions starting in the first Trump administration is helpful.
Over the past decade, starting with April 2017 Executive Order (EO) 13788 “Buy and Hire American” and July 2017 EO 13806 “Assessing and Strengthening the Manufacturing and Defense Industrial Base and Supply Chain Resiliency of the United States”, a renewed emphasis on American manufacturing and domestic supply chain availability, as well as security for national security purposes, gained more attention of the DIB and Congress. In EO 13806 directed an October 2018 interagency report that listed risk factors affecting the DIB – “sequestration and uncertainty of government spending; the decline of critical markets and suppliers; unintended consequences of US Government acquisition behavior; aggressive industrial policies of competitor nations and the loss of vital skills in the domestic workforce.” The report acknowledged the erosion of capabilities for the DIB and manufacturing due to these “macro forces.”
Less than two years later, the COVID-19 pandemic exposed serious deficiencies in American supply chains. The Defense Production Act was invoked for surge capacity contracts and expansion, almost exclusively for domestic needs such as ventilators and masks. Congressionally enacted supplemental funding followed the same path, with little funding for the DIB. Contracting and vaccine expansion under Operation Warp Speed was DOD’s contribution to the response. The pandemic exposed the reliance on foreign manufacturing, and, in February 2021 the Biden Administration issued EO 14017 “America’s Supply Chains,” directing reviews of selected supply chains and government sectors. By June 2021, a task force focused on supply chain disruption was formed.
Supply chain remained a focus of the Biden Administration with a 2022 Presidential Determination 2022-11 (DPA Section 303) invoked for critical minerals and the 2022 bipartisan CHIPS and Science Act, which included a $2 billion CHIPS for America Defense Fund for DIB microelectronics. Within DOD, the Office of Strategic Capital (OSC) was established to attract, provide and scale public/private investment for emerging technology. The first National Defense Industrial Strategy (NDIS) was released in 2024, and covered by FBIQ, to identify what needed to be fixed at the time in order to modernize the “defense industrial ecosystem.”
The second Trump Administration started with an avalanche of EOs reaching across the government. On the first day, Biden administration EOs were revoked through EO 14148 “Initial Recessions to Harmful Executive Orders and Actions” and replaced by ones more in line with Project 2025. National Security related EOs include EO 14241 “Immediate Measures to Increase American Mineral Production,” EO 14265 “Modernizing Defense Acquisitions and Spurring Innovation in the Defense Industrial Base,” and EO 14269 “Restoring America’s Maritime Dominance.” Two EOs of note issued in 2026 are February’s EO 14383 “Establishing an America First Arms Transfer Strategy” and July’s EO 14415 “Securing America’s Defense Supply Chains and Ensuring Domestic Acquisition of Critical Materials.”
We do things in a very old manner, a slow manner, a bureaucratic manner, and we must change that…The contractors who are willing to change with us will proser and grow. Those who don’t and resist will be gone.
Deputy Secretary of Defense Feinberg,
November 7, 2025
MOVING FORWARD
To implement the directives and resulting findings from past EOs, the defense department has reorganized, created and shifted focus of existing and new organizations. The Industrial Base Analysis and Sustainment (IBAS) is an organization essential to the execution of many of the EOs mentioned above through expanding and modernizing the DIB. With a healthy budget of close to $11 billion, investment is focused on six critical areas – critical materials, workforce development, kinetic weapons, microelectronics, casting and forgings, and batteries through the Cornerstone Other Transaction Authority, overseen by Warfighting, Investments, Resourcing and Execution (WIRE). The DIB Consortium is also used by WIRE to expand the DIB supporting IBAS’ six critical areas, ensure a resilient US supply chain and workforce for national security crises. Both organizations fall under the Assistant Security of War for Industrial Base Policy, along with offices for planning and analysis as well as working with industry.
In the second Trump Administration, Deputy Secretary of Defense Feinberg expanded the traditional role for oversight of the internal workings of the department to expending defense capital through new organizations such as the Economic Defense Unit (EDU) and Office of Strategic Capital (OSC). Feinberg, co-founder of the global investment firm Cerberus Capital Management, stood up the EDU, an office providing economic guidance and coordination across the DOD as well as support for making “strategic equity and control investments in companies that align with its mission.”
Investments in critical areas identified by the department, using appropriated, and mandatory funding, are more in line with a private company than the government. Government loans to industry provided by OSC, established under Biden, certainly falls within this construct.
An August 5 Feinberg memo to industry leaders directed them to submit plans within 21 days to “drive significantly faster, more aggressive delivery schedules and/or increased production for critical capabilities,” according to press reports confirmed by Pentagon Press Secretary Parnell. Obviously, this is an attempt to encourage, or force, firms to accelerate weapons production to replenish depleted supply. Parnell reportedly confirmed that the memo “will inform the fiscal year 2028 budget submitted to Congress for funding, and it is entirely consistent with our ongoing push to rebuild the defense base.”
The Defense Department has prioritized rebuilding the DIB and has allocated funding to “supercharge” the efforts. Reorganized offices within the secretariat are using new tools, funding and contract vehicles to speed up investments. Over the past decade, EOs provided the space and direction to arrive where the department is now, especially with the second Trump administration extremely friendly to industry and willing to push boundaries in public-private partnerships.
Chart I. Source: DOD
A REALITY CHECK
Despite these signs of progress, there is a real risk that FY27 defense funding decisions will be delayed until at least December and potentially March 2027. A majority of Trump’s FY27 funding request for the DIB is in the mandatory category, requiring a fourth budget reconciliation bill for Defense, in addition to FY27 annual appropriations. Despite the Administration’s push for $350 billion of FY27 mandatory funding, Deputy Secretary Feinberg’s framework agreements may end up as unfunded requirements.